Feedback to PN 289 – 'ASB seeks views on the future application of reporting requirements for UK Companies'

The Board issued a Press Notice (PN 289) on 10 May 2006 seeking views on the future application of reporting requirements for UK companies. Forty-three responses were received.

In summary, the tentative proposals in PN289 were that:

1. All UK Public Quoted and other publicly accountable companies would be required to apply full IFRS, irrespective of turnover and whether they present group accounts or not.
2. The use of the ASB’s Financial Reporting Standard for Smaller Entities (FRSSE), which enables small entities to take advantage of simplified requirements, would be extended beyond small companies to include medium-sized entities.
3. UK subsidiaries of group companies that apply full IFRS would also be required to apply full IFRS in respect of measurement and recognition, but with reduced disclosure requirements (yet to be defined).
4. There has not yet been a decision on companies that do not fall within 1, 2 or 3 above. The alternatives seem to be (i) extend the application of the FRSSE further, (ii) apply IFRS to more companies, (iii) maintain UK GAAP for them, or (iv) some combination of these three alternatives.

The Board have approved two documents that provide feedback to these proposals:

1. An overview of the responses - “Feedback to PN 289 – ASB seeks views on the future application of reporting requirements for UK companies.”
   
   This document outlines the next steps, which in summary are that the responses to the press notice broadly support a two-tier approach, with the lower level potentially (and ideally) being based on the IASB’s SME project. It will be necessary to review the IASB’s proposals when the ED is published to judge whether or not they are suitable for the UK’s needs. In the meantime further research will be put in hand.
2. A detailed paper – “Further consideration of the Board’s strategy for the convergence of UK standards with IFRS”
   
   

The papers may be downloaded below:

• Feedback to PN 289 – ASB seeks views on the future application of reporting requirements for UK companies
• Further consideration of the Board’s strategy for the convergence of UK standards with IFRS

If you have any comments or queries please contact Ian Mackintosh i.mackintosh@frc-asb.org.uk  or Peter Godsall p.godsall@frc-asb.org.uk  

As stated in the ASB’s convergence strategy paper, which was discussed at the ASB Public Meeting on 19 January 2006, the ASB now proposes that it should not continue to follow the phased convergence approach. It proposes to issue new IFRS-based UK accounting standards, but these will not be mandatory before a single date, which is currently estimated to be financial years beginning on or after 1 January 2009. The proposed date still remains ‘estimated’ and will be governed by the outcome and timings of the IASB’s proposals.